WASHINGTON, DC—Fannie Mae has launched a forward-looking monthly index that captures consumers' sentiment about the housing market. It is based on six questions, out of 100 asked of consumers every month for the National Housing Survey, now in its fifth year. These questions have proven to have a meaningful statistical relationship with such activities as mortgage origination volumes, house prices, home sales and housing starts, Steve Deggendorf, Fannie Mae's director of Economic & Strategic Research, tells GlobeSt.com.
Fannie Mae built the index back to March of 2011. It was a 60 then. Today it is at 80.8, slightly off its high mark earlier this year of 84.7.
"We are looking at this as something that complements and enhances more traditional sources of data," he says.
The six questions that will comprise the data in the Home Purchase Sentiment Index include:
· In general, do you think this is a very good time to buy a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
· In general, do you think this is a very good time to sell a house, a somewhat good time, a somewhat bad time, or a very bad time to buy a house?
· During the next 12 months, do you think home prices in general will go up, go down, or stay the same as where they are now?
· During the next 12 months, do you think home mortgage interest rates will go up, go down, or stay the same as where they are now?
· How concerned are you that you will lose your job in the next twelve months? Are you very concerned, somewhat concerned, not very concerned, or not at all concerned that you will lose your job in the next twelve months?
· How does your current monthly household income compare to what it was twelve months ago?
To create monthly number, Fannie Mae will average the answers of these six questions. It is very similar in construction to the indices products by the University of Michigan and the Conference Board, Deggendorf said.
To develop the index, Fannie Mae worked with James Wilcox, an economist at UC Berkeley who chairs the school's economic and policy group.
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